With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Condor Hospitality Trust, Inc. (NYSE:CDOR).
Condor Hospitality Trust, Inc. (NYSE:CDOR) investors should be aware of an increase in support from the world's most elite money managers of late. Our calculations also showed that CDOR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's review the new hedge fund action regarding Condor Hospitality Trust, Inc. (NYSE:CDOR).
How are hedge funds trading Condor Hospitality Trust, Inc. (NYSE:CDOR)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 150% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CDOR over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Condor Hospitality Trust, Inc. (NYSE:CDOR), worth close to $2.9 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is GAMCO Investors, led by Mario Gabelli, holding a $1.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Donald Sussman's Paloma Partners, Ken Griffin's Citadel Investment Group and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital. In terms of the portfolio weights assigned to each position Paloma Partners allocated the biggest weight to Condor Hospitality Trust, Inc. (NYSE:CDOR), around 0.02% of its 13F portfolio. Springbok Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CDOR.
Now, specific money managers were leading the bulls' herd. GAMCO Investors, managed by Mario Gabelli, assembled the biggest position in Condor Hospitality Trust, Inc. (NYSE:CDOR). GAMCO Investors had $1.3 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also initiated a $0.9 million position during the quarter. The other funds with brand new CDOR positions are Ken Griffin's Citadel Investment Group and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Condor Hospitality Trust, Inc. (NYSE:CDOR) but similarly valued. These stocks are Mustang Bio, Inc. (NASDAQ:MBIO), County Bancorp, Inc. (NASDAQ:ICBK), iCAD Inc (NASDAQ:ICAD), and Axcella Health Inc. (NASDAQ:AXLA). This group of stocks' market caps match CDOR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MBIO,6,15947,0 ICBK,6,11470,1 ICAD,6,8038,-2 AXLA,3,1069,-1 Average,5.25,9131,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $6 million in CDOR's case. Mustang Bio, Inc. (NASDAQ:MBIO) is the most popular stock in this table. On the other hand Axcella Health Inc. (NASDAQ:AXLA) is the least popular one with only 3 bullish hedge fund positions. Condor Hospitality Trust, Inc. (NYSE:CDOR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CDOR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CDOR investors were disappointed as the stock returned 0% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.